Category: Solana performance

Solana (SOL) has been ahead of the rest of the crypto market when it comes to gains. The market had seen renewed interest following the holidays which led to a small recovery here and there especially for the large players but Solana had been able to break completely from the trend and record double-digit gains in the last couple of days.

What Is Driving Solana’s Growth?

Despite being at the forefront of massive FUD that has dragged its price down toward two-year lows, Solana has now been able to recover a good amount of gains over the last few days. While the comments from Ethereum founder Vitalik Buterin in support of the blockchain had helped, there was another factor pushing the price higher.

A new meme coin known as BONK had graced the Solana ecosystem and after being airdropped to holders of major NFT projects, the price of the meme coin had soared. The resulting gains would see investors FOMO into the cryptocurrency and since they needed to trade on the Solana network, the price of SOL had surged given all of the new attention it was receiving.

In two days, SOL ballooned to become one of the best performers in the space coming into the new year. It is up over 16% in the last 24 hours alone and the price of the digital asset has moved from the loss territory into the green over the last week. It is now sitting at almost 37% gains for investors over this time period, according to data from Coinmarketcap.

Can SOL Hold The Gains?

Right now, the growth of SOL in the market is still largely driven by the FOMO triggered by the BONK meme coin. Since the hype around this coin has been waxing strong, it is expected that interest will remain high among investors, thereby sustaining the growth trend recorded by Solana.

However, it is important to keep in mind that the BONK cryptocurrency is largely driven by hype, and just like any other meme coin, it is expected that this hype would die down at some point. Now, once this happens, the decline in interest would also significantly impact the price of SOL, dragging it down along with it. That is unless something else comes up to drive the price of SOL higher.

It is also expected that some profit-taking would begin, where investors would begin to dump SOL to claim the gains already being seen. This, as well, will contribute to a wind-down, and a downward correction would follow. But this correction is not expected to claim more than 10% of current profits given that the price of SOL is now trading above its 20-day moving average of $12.3.

SOL is changing hands at $13.72 at the time of this writing. It has overtaken Shiba Inu to become the 15th largest cryptocurrency with a market cap of $5.04 billion.

Solana has been on a depressing downtrend ever since the FTX crypto exchange imploded. The asset has already lost a massive chunk of its all-time high value but the onslaught looks to be far from over. In the last seven days, the losses for the digital asset have ramped up, dragging its price down into single-digit territory.

Solana Posts More Than 20% Losses

According to crypto data aggregator Coinmarketcap, the price of Solana is down more than 20% in the last 7 days alone. These losses align with the general bear market trend being experienced in the crypto sector but the decline in faith in the digital asset brought about by the collapse of FTX, Solana’s biggest support, puts added pressure on it.

Sam Bankman-Fried, through FTX and Alameda Research, had funneled massive amounts of funds into the Solana ecosystem, which in hindsight reveals why the network had grown so much in such a short period of time. However, with all of that money gone, the network has had a hard time keeping up.

Also, as James Spediacci notes on Twitter, a lot of the dev activity on the network was actually faked. It alleges that SOL stablecoin exchange Saber and DeFi protocol Sunny had made up about 70% of the total value locked on the Solana blockchain at its peak were operated by the Macalinao brothers, citing a report from CoinDesk.

With all of these gone and no new money being injected into the ecosystem by Bankman-Fried, Solana is now in a freefall of its own making. Additionally, Matrixport announced that it would be delisting all Solana products on Dec. 30, dealing another blow to the already struggling network.

SOL To Recover From Single-Digits?

This week, the price of SOL dropped below the $10 level for the first time in almost two years. It is now sitting at its lowest point since February 2021, which was the last time that Solana had seen single-digit prices before the bull market took over.

However, even with the digital asset dropping so low, it is unlikely that the decline is over. One thing to always note is how badly cryptocurrencies tend to perform in their first bear cycle, even bitcoin and ethereum weren’t exempted. But one thing that sets SOL apart is the factors surrounding its decline. 

While digital assets such as bitcoin and ethereum still had ample support and faith in the market even after dropping more than 90% in their first bear markets, Solana is having a hard time keeping the faith. Add in the fact that leading NFT projects DeGods and yOOts migrated from Solana to Ethereum and Polygon and it shows just how negative the sentiment surrounding the network is.

Nevertheless, this is not to say that SOL is completely out of the game. There are been more surprising recoveries in the crypto world and SOL remains popular in the media, albeit in negative circumstances. The next bull market could hold a lot of promise for the digital asset if it is able to survive the crypto winter.